Correlation Between BLZ and Orca

Can any of the company-specific risk be diversified away by investing in both BLZ and Orca at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BLZ and Orca into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BLZ and Orca, you can compare the effects of market volatilities on BLZ and Orca and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BLZ with a short position of Orca. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLZ and Orca.

Diversification Opportunities for BLZ and Orca

0.7

Correlation Coefficient

BLZ  Orca

Poor diversification

The 3 months correlation between BLZ and Orca is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and Orca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca and BLZ is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BLZ are associated (or correlated) with Orca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca has no effect on the direction of BLZ i.e., BLZ and Orca go up and down completely randomly.

Pair Corralation between BLZ and Orca

Assuming the 90 days trading horizon BLZ is expected to under-perform the Orca. But the crypto coin apears to be less risky and, when comparing its historical volatility, BLZ is 1.16 times less risky than Orca. The crypto coin trades about 0.0 of its potential returns per unit of risk. The Orca is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  391.00  in Orca on December 28, 2024 and sell it today you would lose (126.00) from holding Orca or give up 32.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BLZ  vs.  Orca

BLZ

Risk-Adjusted Performance

Very Weak

Over the last 90 days BLZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BLZ is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Orca

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orca are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Orca exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BLZ and Orca

The main advantage of trading using opposite BLZ and Orca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLZ position performs unexpectedly, Orca can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Orca will offset losses from the drop in Orca's long position.

The idea behind BLZ and Orca pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.